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29 Jan 2026

International Economy

FOMC meeting 27–28 January: Fed kept policy rate steady at 3.50–3.75%, citing improvement in the economic outlook (Business Brief No.4238 Full Ed.)

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  • At the FOMC meeting on January 27–28, 2026, the US Federal Reserve (Fed) voted 10–2 to keep the policy rate unchanged at 3.50–3.75 percent, in line with KResearch’s prior forecast. The Fed also signaled a more positive view on the economic outlook, noting that the economy continues to expand at a solid pace and that the labor market has begun to stabilize, while inflation remains above the target range. 
  •  KResearch assesses that the Fed’s signaling suggests a pause in rate cuts, with the timing of rate reductions likely to be pushed back to mid-year or later. This reflects expectations that the US economy in the first half of the year will continue to be supported by high-income household spending, AI-related investment, and tax refunds stemming from tax-cut measures under the Trump administration. Meanwhile, US inflation is expected to gradually ease towards the Fed’s 2-percent target, although risks from potential additional tariff hikes remain. 
  • KResearch anticipates that the Fed may consider 2-3 rate cuts from mid-year onwards, as the US economy is likely to slow, particularly in the second half of 2026. Jerome Powell’s term as Fed chair will end in May 2026, and both the new Fed chair and the composition of the FOMC this year are expected to tilt more towards an accommodative stance. Markets currently assign the highest probability to Rick Rieder – widely regarded as having a dovish monetary policy stance – being appointed as the next Fed chair.

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International Economy

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